Hungarian Parliament building

Hungary Inflation February 2022

Hungary: Inflation at over 14-year high in February

Consumer prices jumped 1.10% in February over the previous month, following the 1.37% surge recorded in January, which had marked the highest reading in 10 years. The sharpest price increases were recorded for food, alcoholic beverages and tobacco and consumer durables.

Inflation soared to 8.3% from January’s 7.9%, marking the highest inflation rate since August 2007. Meanwhile, the trend pointed up, with annual average inflation coming in at 6.0% in February (January: 5.5%), the highest reading since December 2008. As a further sign of widespread inflationary pressures, core inflation jumped to 8.1% in February from the previous month’s 7.4%, marking the highest print since September 2001.

Commenting on the release, Peter Virovacz, senior economist at ING, stated:

“Some of us had hoped that the government’s anti-inflationary measures, like the fuel and basic food price cap, and the utility cost freeze, would somehow be able to stop the acceleration in the headline inflation reading. We were wrong, as the strong repricing has continued all over the consumer basket.

Forecasting inflation for the upcoming months is highly challenging due to the Russia-Ukraine war and sanctions, which are impacting nearly every aspect of our lives. Risks have clearly moved further upside. First of all, the latest inflation print was higher in every aspect than we forecast. The rising price expectations of both households and corporates suggest that the repricing channel will remain quite strong. The forint valuation and the commodity price shocks are adding pressure as well, despite the anti-inflationary shield measures. Our base case is that the government will let these expire, thus we will see a significant jump in inflation in May-June, probably above 10% year-on-year. We don’t dare call a narrow forecast range for 2022, but we see 8.0-9.5% average inflation with further upside risks.”

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